Constellation terminates 300 grower contracts

Constellation Wines Australia has terminated the contracts of over 300 growers in the Murray Valley, South Australia.

Australia’s biggest buyer of wine grapes advised growers just before the New Year that they would see their contracts end after the 2012 vintage.

The company had previously given three years’ notice to more than 200 other contracted growers in December 2008.

The decision has come at a time when growers in the region are facing plummeting wine grape prices.

In some cases growers are being offered up to 50 per cent less for their grapes than in 2008, according to figures released by Constellation and other major wineries in December.

Murray Valley Winegrowers chief executive Mike Stone told Australian newspaper The Weekly Times that the latest round of cuts came as a surprise and were ‘gut-wrenching for long-term, loyal contract growers’.

Constellation had warned growers at a forum in June to expect the company to cut grape-intake by at least one-third, in a move to combat the recession.

Rob Sands, president and CEO of Constellation Brands in New York, appeared on the television and radio in December, stressing the importance of ‘stepping back a bit and thinking economically in challenging times’.

The growers given notice in 2007 will deliver their last grapes this year.